Thursday, July 29, 2010

HERE AT THE CROSSOVER, SOLAR BEATS NUCLEAR

THE POINT16 cents per kilowatt-hour. It doesn’t sound very profound, but its impact could be as big as 9-11 or 1776 or E=MC2.

The rap against solar is that it is too expensive, right? Wrong. And the big deal about nuclear is that it is so cheap, right? Wrong. In this case, 2 wrongs make a right.

According to Solar and Nuclear Costs – The Historic Crossover; Solar Energy is Now the Better Buy, from John O. Blackburn, a Duke University professor of economics, solar photovoltaic (PV) energy-generated electricity now costs around 14-to-19 cents per kilowatt-hour (kW-hr) and nuclear plants in the planning stages will not be able to sell their electricity at less than 14-to-18 cents per kW-hr. That makes NOW the “crossover point” at which solar achieves price parity with nuclear and it makes "16 cents per kW-hr" the numeric formulation heralding the arrival of what visionary Hazel Henderson called The Age of Light.

Nuclear power cost expert Mark Cooper, a senior fellow for economic analysis at Vermont Law School’s Institute for Energy and Environment, says the cost of a nuclear power plant went from ~$3 billion per reactor (average) in 2002 to ~$10 billion per reactor (average) in 2010. (Costs are, of course, somewhat variable by region.) (See THE TOO, TOO COSTLY CASE OF NUCLEAR POWER)

Opponents of solar PV often say it is only competitive because of subsidies. But a report in 2000 – when nuclear plants were only enormously expensive and not prohibitively expensive – found that ~$151 billion in federal subsidies went to the wind, solar and nuclear industries and 96.3% of it went to nuclear.

With the price of nuclear energy-generated electricity steadily rising and the price of solar PV-generated electricity steadily coming down, the Blackburn study predicts the cost of solar PV will be price-competitive WITHOUT subsidies by 2020.

In late 2009, both Citigroup Global Markets and Moody’s issued official statements warning against investments in nuclear. Even nuclear energy industry advocates can no longer deny the widely reported evidence that nuclear power plants are more and more expensive to build. Marvin Fertel, President and CEO of the Nuclear Energy Institute, recently issued a statement admitting it is not a good time to invest in nuclear.

The nuclear industry has devised a couple of strategies to get around the unaffordable costs of building their plants. One is to shift the risk to the U.S. government by demanding federal loan guarantees. Another is to shift the risk to ratepayers by using the “construction work in progress” financing system that adds a fee to each utility customer’s bill for new plant construction and keeps them paying for 6-to-12 years before getting any electricity for their investment.

There are good reasons to reject such multi-hundred billion-to-trillion dollar schemes in favor of using the money to build more cost-effective forms of emissions-free electricity generation infrastructure like wind and solar.

The 1980s nuclear "boom" is now regarded as a managerial disaster and it cost electricity users an estimated $100 billion.

Nuclear proponents say that will not happen with modern plant designs and technology but only one of five proposed designs now being considered has ever been built. New technology, no matter how well thought out and tested, inevitably introduces unforeseen complications. Cost over-runs, at the very least, are a veritable certainty on the proposed plants. Cooper said 90% of those with applications pending have had a delay, a design problem, a cost increase or some other financing problem.

The only thing that keeps proponets’ dream of a “nuclear renaissance” alive is global climate change. Nuclear is, at the plant, emissions-free power generation. Lobbyists have been able to get government attention and negotiate loan guarantees and tax breaks in compromise deals with New Energy advocates fighting for a sliver of subsidy money.

But a bad investment is a bad investment and some are finally realizing there is little point in throwing good money after bad. Loan guarantees make credit for the billions that go into nuclear plants cheaper but lay all the risk off onto the taxpayer while retaining all the benefit for investors.

Meanwhile, there are much better ways to use taxpayer money. New Energy (NE) and Energy Efficiency (EE) grow ever less costly and could easily meet rising demand for emissions-free electricity generation at a much lower cost. Only electricity generated by nuclear reactors built before Ronald Reagan left the Presidency is cheaper than NE and EE.

A calculation from Cooper found that the 100 new plants proposed by the advocates of a nuclear renaissance would cost taxpayers and electricity users $1.9 trillion-to-$4.4 trillion more than a similar investment in NE and EE capacity.

As Cooper pointed out recently, the very fact of the “nuclear renaissance” PR pitch demonstrates the industry cannot win its way with real numbers. What th4e nuclear industry is now discovering is that Wall Street knows the difference between a PR pitch and a good investment. If only Capitol Hill could make the distinction.

THE DETAILSThe cost of solar photovoltaic (PV) systems has fallen steadily for a decade and is expected to continue doing so for another decade.

The cost of nuclear power plants has risen steadily for decades and is expected to continue doing so for the foreseeable future.

In 2010, the 2 costs crossed in North Carolina. New solar installations now generate electricity that is less expensive than the cost of electricity would be from proposed new nuclear plants.

Though North Carolina’s utilities – like utilities across the country – are clinging to old ways and the Old Energies, it would appear the state will be a proving ground for getting by with New Energy (NE) and Energy Efficiency (EE) and without nuclear because state law requires generators of electricity system to follow a “least-cost” path.

Many major utilities still seem oblivious to cost trends in energy economics. Electricity costs will go up, inevitably, but they will go up more for those who do not build 21st century sources of generation and institute EE.

Commercial-scale solar developers now offer North Carolina utilities electricity at 14 cents or less per kW-hr. Duke Energy and Progress Energy, the state’s 2 biggest investor-owned utilities (IUOs), are buying relatively little solar and pushing ahead with plans for new nuclear power plants despite the fact that projections see them paying 14-to-18 cents per kW-hr for nuclear energy-generated electricity.

On subsidies: Solar PV is just emerging as a utility-scale generation source and warrants subsidies to allow it to continue emerging. The Blackburn study foresees present support allowing it to mature to price-parity without subsidies by 2020.

Nuclear plants continue to require subsidies after 40 years as a commercial generation source. This is inappropriate. It is the federal government backing a loser. The Blackburn study found no projections that nuclear will ever be price-competitive without subsidies.

The success of EE over the last 3 decades has proven the cheapest method, superior to new generation, of controlling demand. Where EE has been aggressively and effectively applied, demand has grown only a little. It is expected that EE will grow more and per capita electricity demand will decline.

Even with the expanded use of battery electric vehicles (BEVs), fossil fuel consumption will decline because cars use electricity more efficiently than they use petroleum fuels. The grid will supply much BEV charging with off-peak power generated by wind and mouch of the rest with peak power generated by solar.

Research at the Lawrence Berkeley National Laboratory that tracked the price of solar PV showed it going from $12 per installed watt in 1998 to $8 in 2008 (average). Costs declined even more in 2009 and 2010 when an excess supply of silicon caused a drop in the price of panels.

The 12-year system cost decline was 50% and the mid-2010 price of solar PV in North Carolina was 12-to-14 cents per kW-hr for large systems and 14-to-19 cents per kW-hr for residential systems for an average of 16 cents.

The average price in 2020 is expected to be 7.5 cents per kW-hr.

The cost of solar water heating will follow and heating water is 15-to-25% of a typical homeowner’s utility bill.

Capacity:(1) 2009: The world intstalled 7,000 megawatts (MW). Germany did most, almost 3,500 MW. The U.S. did 429 MW. California and New Jersey led in the U.S. North Carolina did 8 MW.(2) Cumulative: The world has 22,000+ MW. Germany (~9,000 MW), Spain and Japan led. The U. S had 1653 MW. California had 1102 MW and New Jersey had 128 MW. North Carolina had 13 MW.(3) No U.S. nuclear power plants have come online since the late 1980s. Mostproposed reactors are 1100-to-1200 MW.(4) In general, the trend is from centralized power plants to distributed generation.

North Carolina utilities like Duke Energy and Progress Energy support the 2 popular strategies to get around the high cost of new plants, (1) federal loan guarantees and (2) construction work in progress financing.

Ironically, many who oppose subsidies to the New Energies and bailouts for big banks call for (1) federal loan guarantees for nuclear construction which could leave taxpayers responsible for billions of dollars if cost over-runs occur and (2) federal underwriting of nuclear plant insurance which could leave taxpayers responsible for hundreds of billions or even trillions of dollars if there is a serious accident.

Utilities, which often oppose increasing power charges for New Energy, advocate increasing ratepayer prices to pay for new nuclear plant construction even if electricity users pay high prices without getting new nuclear generation for 6-to-12 years and even if the nuclear plant is never completed.

Ironically, the elevated prices charged to finance a nuclear plant can cut demand and eliminate the need for the new plant. This demonstrates how effective well-designed EE programs could be. In addition, new nuclear will permanently raise rates and keep the demand down, making the new plants unnecessary.

North Carolina’s 2007 Renewable Electricity Standard (RES) has a price cap protecting ratepayers from a too-rapid rate rise. There should also be such a cap for nuclear.

Construction work in progress financing of consumer solar would eliminate the one obstacle to increased solar installations, the high up-front costs.

During the “nuclear renaissance” of 2000-to-2010, the cost of new nuclear rose from an estimated $2 billion per reactor to an estimated $10 billion per reactor. No new U.S. plants were completed. No new plant will come on line for at least 6 years and most projects are 10-to-12 years from service.

The Blackburn study puts the cost of nuclear energy-generated electricity at 18+ cents per kW-hr and transmission (which distributed rooftop PV requires very little of) puts the delivered price at 22 cents per kW-hr. Cooper’s work puts the price at 12-to-20 cents per kW-hr, verifying the Blackburn analysis.

In its conclusion, it points out that while utilities cling to the “necessity” of Old Energy in general and new nuclear in particular, the real need is for the more cost-effective options of NE and EE.

The Blackburn study suggests that the crossover in price competitiveness is just a signpost on the way to a much bigger crossover, from the Old Energies to the New Energy economy.

QUOTES- November 2009 report from credit rating service Moody’s: “Moody’s is considering taking a more negative view for those issuers seeking to build new nuclear power plants…Historically, most nuclear-building utilities suffered ratings downgrades — and sometimes several — while building these facilities. Political and policy conditions are spurring applications for new nuclear power generation for the first time in years. Nevertheless, most utilities now seeking to build nuclear generation do not appear to be adjusting their financial policies, a credit negative.”

- Mark Cooper, senior fellow for economic analysis/nuclear power cost expert, Vermont Law School Institute for Energy and Environment: “The utilities insist that the construction work in progress charged to ratepayers also include the return on equity that the utilities normally earn by taking the risk of building the plant — even though they have shifted the risk to the ratepayers…If the plant is not built or suffers cost overruns, the ratepayers will bear the burden…[T]he utility is making a one-way bet, allowing it to make a profit even when the project fails…The people bear the risks and costs; the nuclear utilities take the profits. Without loan guarantees and guaranteed construction work in progress, these reactors will simply not be built, because the capital markets will not finance them.”

- Mark Cooper, senior fellow for economic analysis/nuclear power cost expert, Vermont Law School Institute for Energy and Environment: “In an attempt to circumvent the sound judgment of the capital markets, nuclear advocates erroneously claim that subsidies lower the financing costs for nuclear reactors and so are good for consumers…But shifting risk does not eliminate it. Furthermore, subsidies induce utilities and regulators to take greater risks that will cost the taxpayers and the ratepayers dearly…“The risks that have dismayed Wall Street should be taken seriously by policy makers because they would cost not just hundreds of billions of dollars in losses on reactors that are canceled, but also trillions in excess costs for ratepayers when reactors are brought to completion by utilities that fail to pursue the lower-cost, less risky options that are available…The frantic effort of the nuclear industry to increase federal loan guarantees and secure ratepayer funding of construction work in progress from state legislatures is an admission that the technology is so totally uneconomic that the industry will forever be a ward of state, resulting in a uniquely American form of nuclear socialism.”

1 Comments:

Before all you anti-nukes celebrate what you imagine vindicates your ideologically-pure convictions about solar vs. nuclear energy, you need to read this article in detail and not take the conclusions at face value.

As is normal for these propaganda pieces, the authors compare apples and oranges to reach their target conclusion, taking information from sources with much different methodologies. For extra, they included blatant misinformation about supposed "subsidies."

Cooper's data comes from incompatible sources. Early costs come from academics who estimated the costs for a fully-developed nuclear capacity, allowing that costs for early plants would be higher than for later plants because of having to pay manufacturers' tooling-up costs. Middle-time costs come from utilities estimating their own costs for building one plant without the benefit of long-time experience. Later costs come from Wall Street analysts--as we've learned in the last few years, nothing they say can be trusted. By combining these estimates in a contrived way, Cooper was able to plot a cost escalation out of proportion to reality.

The authors then take solar information from a Lawrence Berkeley paper, which shows that solar panels haven't dropped in price, but unit installation costs have dropped because larger installations offer economy of scale.

So the conclusion here is nothing more than a contrived rationalization for the authors' politically-derived opinions and has nothing to do with reality.

Review of OIL IN THEIR BLOOD, The American Decades by Mark S. Friedman

OIL IN THEIR BLOOD, The American Decades, the second volume of Herman K. Trabish’s retelling of oil’s history in fiction, picks up where the first book in the series, OIL IN THEIR BLOOD, The Story of Our Addiction, left off. The new book is an engrossing, informative and entertaining tale of the Roaring 20s, World War II and the Cold War. You don’t have to know anything about the first historical fiction’s adventures set between the Civil War, when oil became a major commodity, and World War I, when it became a vital commodity, to enjoy this new chronicle of the U.S. emergence as a world superpower and a world oil power.

As the new book opens, Lefash, a minor character in the first book, witnesses the role Big Oil played in designing the post-Great War world at the Paris Peace Conference of 1919. Unjustly implicated in a murder perpetrated by Big Oil agents, LeFash takes the name Livingstone and flees to the U.S. to clear himself. Livingstone’s quest leads him through Babe Ruth’s New York City and Al Capone’s Chicago into oil boom Oklahoma. Stymied by oil and circumstance, Livingstone marries, has a son and eventually, surprisingly, resolves his grievances with the murderer and with oil.

In the new novel’s second episode the oil-and-auto-industry dynasty from the first book re-emerges in the charismatic person of Victoria Wade Bridger, “the woman everybody loved.” Victoria meets Saudi dynasty founder Ibn Saud, spies for the State Department in the Vichy embassy in Washington, D.C., and – for profound and moving personal reasons – accepts a mission into the heart of Nazi-occupied Eastern Europe. Underlying all Victoria’s travels is the struggle between the allies and axis for control of the crucial oil resources that drove World War II.

As the Cold War begins, the novel’s third episode recounts the historic 1951 moment when Britain’s MI-6 handed off its operations in Iran to the CIA, marking the end to Britain’s dark manipulations and the beginning of the same work by the CIA. But in Trabish’s telling, the covert overthrow of Mossadeq in favor of the ill-fated Shah becomes a compelling romance and a melodramatic homage to the iconic “Casablanca” of Bogart and Bergman.

Monty Livingstone, veteran of an oil field youth, European WWII combat and a star-crossed post-war Berlin affair with a Russian female soldier, comes to 1951 Iran working for a U.S. oil company. He re-encounters his lost Russian love, now a Soviet agent helping prop up Mossadeq and extend Mother Russia’s Iranian oil ambitions. The reunited lovers are caught in a web of political, religious and Cold War forces until oil and power merge to restore the Shah to his future fate. The romance ends satisfyingly, America and the Soviet Union are the only forces left on the world stage and ambiguity is resolved with the answer so many of Trabish’s characters ultimately turn to: Oil.

Commenting on a recent National Petroleum Council report calling for government subsidies of the fossil fuels industries, a distinguished scholar said, “It appears that the whole report buys these dubious arguments that the consumer of energy is somehow stupid about energy…” Trabish’s great and important accomplishment is that you cannot read his emotionally engaging and informative tall tales and remain that stupid energy consumer. With our world rushing headlong toward Peak Oil and epic climate change, the OIL IN THEIR BLOOD series is a timely service as well as a consummate literary performance.

Review of OIL IN THEIR BLOOD, The Story of Our Addiction by Mark S. Friedman

"...ours is a culture of energy illiterates." (Paul Roberts, THE END OF OIL)

OIL IN THEIR BLOOD, a superb new historical fiction by Herman K. Trabish, addresses our energy illiteracy by putting the development of our addiction into a story about real people, giving readers a chance to think about how our addiction happened. Trabish's style is fine, straightforward storytelling and he tells his stories through his characters.

The book is the answer an oil family's matriarch gives to an interviewer who asks her to pass judgment on the industry. Like history itself, it is easier to tell stories about the oil industry than to judge it. She and Trabish let readers come to their own conclusions.

She begins by telling the story of her parents in post-Civil War western Pennsylvania, when oil became big business. This part of the story is like a John Ford western and its characters are classic American melodramatic heroes, heroines and villains.

In Part II, the matriarch tells the tragic story of the second generation and reveals how she came to be part of the tales. We see oil become an international commodity, traded on Wall Street and sought from London to Baku to Mesopotamia to Borneo. A baseball subplot compares the growth of the oil business to the growth of baseball, a fascinating reflection of our current president's personal career.

There is an unforgettable image near the center of the story: International oil entrepreneurs talk on a Baku street. This is Trabish at his best, portraying good men doing bad and bad men doing good, all laying plans for wealth and power in the muddy, oily alley of a tiny ancient town in the middle of everywhere. Because Part I was about triumphant American heroes, the tragedy here is entirely unexpected, despite Trabish's repeated allusions to other stories (Casey At The Bat, Hamlet) that do not end well.

In the final section, World War I looms. Baseball takes a back seat to early auto racing and oil-fueled modernity explodes. Love struggles with lust. A cavalry troop collides with an army truck. Here, Trabish has more than tragedy in mind. His lonely, confused young protagonist moves through the horrible destruction of the Romanian oilfields only to suffer worse and worse horrors, until--unexpectedly--he finds something, something a reviewer cannot reveal. Finally, the question of oil must be settled, so the oil industry comes back into the story in a way that is beyond good and bad, beyond melodrama and tragedy.

Along the way, Trabish gives readers a greater awareness of oil and how we became addicted to it. Awareness, Paul Roberts said in THE END OF OIL, "...may be the first tentative step toward building a more sustainable energy economy. Or it may simply mean that when our energy system does begin to fail, and we begin to lose everything that energy once supplied, we won't be so surprised."

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